Ryan Cohen’s fans lose millions as Bed Bath & Beyond meme stock bubble pops

Sell orders on the struggling home-goods retailer outpaced buys at a nearly 2:1 ratio

A Bed Bath & Beyond store in Michigan. An explosion of activity saw more than one billion shares of the struggling home-goods retailer trade this week. Reuters
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Individual investors who flocked into Bed Bath & Beyond over the past week, trying to squeeze short sellers and make a killing backed in part by the belief a Ryan Cohen-led shake-up was well under way, are now sitting on $205 million in losses — at the very least.

An explosion of activity saw more than one billion shares of the struggling home-goods retailer trade this week, bringing back the type of cheering and excitement on popular forums such as Reddit’s WallStreetBets last seen at the height of the meme craze last year.

At one point on Wednesday, the stock was up more than 130 per cent for the week.

It all came crashing down on Thursday after news that Mr Cohen himself had actually dumped the stock and cashed in on $68.1m in profits.

“Sometimes when things seem too easy, and you see a 100 per cent rally for no apparent reason, that’s not a sign to get in. That’s a sign to get out,” said Greg Taylor, chief investment officer at Purpose Investments.

“That’s what the lesson should be to anyone to get out of this.”

The very same crowd that has made Mr Cohen their champion as he helped trigger 2021’s GameStop boom, bought a record $131m in shares of Bed Bath & Beyond on Tuesday and Wednesday, according to data from Vanda Research that Bloomberg analysed to estimate the paper losses.

In those same two days, Mr Cohen brought his 11.8 per cent stake in the company to zero.

A representative for RC Ventures on Thursday declined to comment on the sale.

“Investing is an every-person-for-themself business and public figures are not on your side,” said Michael O’Rourke, chief market strategist at JonesTrading.

“No matter what type of trader you are, lessons are generally taught by one’s own profit and losses.”

Losses were piling on Friday, with retail traders on Fidelity’s platform rushing for the exits.

Sell orders on Bed Bath & Beyond outpaced buys at a nearly 2:1 ratio as the stock fell a record 41 per cent to $11.03.

“The average retail investor’s portfolio is down considerably year-to-date, which means that the capacity to cope with additional losses is limited compared to last year,” said Giacomo Pierantoni, Vanda Research’s head of data.

All told, retail traders have pushed about $270m into AMC Entertainment and Bed Bath & Beyond over the past week even as the stocks trail the S&P 500 Index’s 2.4 per cent advance this month.

For the year, the two are down more than 20 per cent each.

Despite all the week’s struggles, meme traders were at it again on Friday: GameStop and AMC Entertainment were among some of the most bought shares on Fidelity.

Updated: August 20, 2022, 6:45 AM